The Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday morning, noting an increase of 23.5% in the group’s seasonally adjusted composite index for the week ending January 4. Mortgage interest rates dropped on all five types of loans the MBA tracks.

On an unadjusted basis, the MBA’s composite index jumped by 68% in the past week. The seasonally adjusted purchase index increased by 17% compared with the week ended January 4. The unadjusted purchase index rose by 59% for the week and was 6% lower year over year.

Mortgage loan rates for top-tier a 30-year fixed-rate loan dropped from 4.78% to 4.54% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 4.59% for the same loan. The yield on a 10-year U.S. Treasury note increased in last week from 2.68% to 2.73% last night. A year ago the 10-year note yielded 2.49%.

Joel Kan, the MBA’s associate vice president of Economic and Industry Forecasting, commented:

Mortgage rates fell across the board last week and applications rebounded sharply, after what was a slower than usual holiday period. The 30-year fixed-rate mortgage declined 10 basis points to 4.74 percent, the lowest since April 2018, and other loan types saw rate decreases of between 9 and 20 basis points. This drop in rates spurred a flurry of refinance activity – particularly for borrowers with larger loans – and pushed the average loan size on refinance applications to the highest in the survey (at $339,800). The surge in refinance activity also brought the refinance index to its highest level since last July.

The MBA’s refinance index jumped by 35% week over week, and the percentage of all new applications that were seeking refinancing increased from 42.7% to 45.8%.

Adjustable rate mortgage loans accounted for 8.4% of all applications, up from 7.6% compared with the prior week.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage slipped from 4.84% to 4.74%. The rate for a jumbo 30-year fixed-rate mortgage dropped from 4.72% to 4.52%. The average interest rate for a 15-year fixed-rate mortgage dipped from 4.25% to 4.16%.

The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 4.16% to 4.05%. Rates on a 30-year FHA-backed fixed-rate loan dropped from 4.86% to 4.70%.

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